At a City Hall news conference, Murray said that although City Light is performing well by some measures, he was unhappy with recent controversies involving Carrasco’s management, including the utility’s hiring of a consulting firm to polish Carrasco’s online image.

“At this time I am not willing to give (Carrasco) a raise,” Murray said, noting the issue has become “a political football.”

The Seattle City Council last month approved a pay increase of up to $119,000 for Carrasco, who currently makes $245,000. Murray’s office previously had said the mayor planned to raise Carrasco’s pay by $60,000 this month.

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Instead, Murray said he’s canceling the raise, despite his belief the City Light chief’s position is underpaid. He said he’ll ask the council to consider a new study of an appropriate salary for the job — and perhaps the creation of an independent salary-setting commission to depoliticize the discussion.

Carrasco and a City Light spokesman did not respond Wednesday to requests for comment.

City studies have shown Carrasco is paid substantially less than the leaders of some comparable and smaller public utilities.

But momentum for Carrasco’s pay raise eroded after a series of negative news stories, culminating in a disastrous radio interview last week.

Last month, The Seattle Times revealed City Light had authorized a $47,500 contract with the image-management firm Brand.com.

Despite Carrasco’s insistence that the contract was about the utility’s image — not his — documents showed the work mostly focused on sanitizing Google search results about Carrasco. The utility is now seeking a refund for the $17,500 spent under the contract.

Carrasco also faced renewed scrutiny over a scam in which two con men dressed as Cherokee Nation members made off with 20 tons of copper wire and scrap metal.

They gained entry to City Light facilities after convincing Carrasco they needed the material for an Indian charity. The copper later was recovered and two suspects were arrested.

Murray, who took office in January, said the decisions in both controversies “didn’t happen on my watch” but said the incidents raised questions about “judgment and trust.”

The final straw came last week, when Carrasco claimed in a KIRO radio interview that he had not asked for a pay raise.

In an interview with The Times, Murray said Carrasco did seek a pay increase — both from his administration and that of previous Mayor Mike McGinn. In meetings, Murray said Carrasco also indicated he was pursuing “other job options” despite saying in the KIRO interview he was not.

The radio interview turned into an embarrassment for Murray’s office, which dodged questions from reporters asking for a yes or no response to the question of whether Carrasco had asked for the raise.

City Light acknowledged in a news release late Monday that Carrasco indeed had pursued a pay raise. Murray said that admission came at his insistence.

Asked why the mayor’s office had not made that clear sooner, Murray said, “Regrettably, my office could not get a hold of me.”

Murray said he had no plans to fire Carrasco and did not ask him to quit.

The City Light chief “may choose to stay or leave,” Murray said at his news conference.

But if Carrasco does depart, Murray warned that the city eventually will have to raise the pay for City Light’s CEO, given the market for such jobs.

“At some point we will hire a new superintendent,” Murray said, referring to the traditional title for the City Light chief, which was changed last year to CEO.

“We will not be able to hire a competent person” even at the higher pay range approved by the council, Murray said.

City Councilmember Kshama Sawant, who voted along with Councilmember Nick Licata against Carrasco’s pay raise June 16, took partial credit for Murray’s decision in a news release.

Sawant said the mayor changed his mind due to “strong public pressure on the city’s political establishment” and said that was “a direct result of having a socialist elected representative” on the council.

Sawant said all salaries for city workers should be capped at no more than $150,000.

First hired at a $210,000 salary in 2004, Carrasco has had his pay increased since then to $245,000 last year. He had been the city’s highest-paid employee until last month,when new Police Chief Kathleen O’Toole was hired at a salary of $250,000 a year.

As authorized by his contract, Carrasco received bonuses totaling $34,000 between 2005 and 2008, according to records provided by Murray’s office.

In 2009, he was awarded an additional $40,000 bonus under the contract, but donated it to a charity benefiting low-income ratepayers after an outcry.

Seattle Times staff reporter Lynn Thompson contributed to this report.